When planning your federal retirement, you can’t assume every dollar you earn counts toward your High-3. When you over-estimate the amount of your High-3, you may end up with less retirement income than you were counting on.
When planning your federal retirement, you can’t assume every dollar you earn counts toward your High-3. When you over-estimate the amount of your High-3, you may end up with less retirement income than you were counting on.
Reasons You Need An Accurate Estimate Of Your High-3 Salary
To plan a financially-secure retirement you need an accurate estimate of your income to see if it will cover your expenses. Just as important, you need to check your record to make sure documentation of your basic pay is accurate. As you’ve likely heard before, a good number of retirement applications are held up due to errors. Add to this, an error in your High-3 can impact the amount you receive once you’re no longer working.
“To find your basic pay, you can check your most recent Standard Form 50 (SF50).”
What’s Included In Your Basic Pay?
It’s simple — your Basic Pay is the portion of your earnings from which deductions for FERS/CSRS benefits are taken. For GS employees, Basic Pay includes locality pay; increases within grade; special pay rates established for recruiting and retention purposes; and certain types of premium pay (example: firefighters and law enforcement officers). For wage system employees, basic pay also includes environmental differential pay. This is considered creditable as basic pay which the OPM uses to calculate your High-3.
What’s Excluded From Your Basic Pay?
When calculating your High-3 average salary, the following types of pay are excluded: lump-sum payment for accrued and accumulated annual leave; bonuses and overtime, holiday pay, Sunday premium pay and military pay; GS night differential pay and foreign or non-foreign post differential pay; travel allowances; recruiting or retention bonuses; and overseas cost-of-living adjustments.
Do Your Research
To find your basic pay, you can check your most recent Standard Form 50 (SF50). This can also tell you if certain types of your pay are being excluded from your High-3. If you have questions, or if you believe you’ve found an error, visit your payroll office and ask them why certain types of pay you’re receiving are being excluded from your High-3.
The 2023 Pay Raise Can Help Increase Your High-3
Since your High-3 average pay rate is weighted by years of creditable service, working an extra year or two can boost the amount of your monthly annuity. For those just a year or two away from retirement, there’s another factor to consider: the 2023 pay raise for all GS workers. If you work longer to take advantage of the highest pay raise in 20 years, you can boost your High-3 considerably.
One of our MyfederalRetirement.US Federal Retirement Specialists can help you run the numbers using our Retirement Income Estimator, to help you understand what will your pension benefits may look like.
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